16.09.2015 | Crunch in Chisinau

Tents dot the square in front of the Moldovan National Assembly in the centre of Chisinau. A speaker on a makeshift podium reads a poem. People queue up in front of a poster to throw darts at the faces of the country’s oligarchs and politicians. Police officers in protective uniforms encircle the crowd.

For over ten days now several hundred Moldovans have been protesting against government corruption and calling for the Cabinet to resign. The protest was organised by a civil society group calling itself Dignity and Truth, which was formed in February 2015, after it emerged that $1 billion had been embezzled from three of the country’s largest banks the previous year. For an economy with a GDP of less than $8 billion, the figure is staggering.

The authorities have been investigating the theft at Banca de Economii, Unibank and Banca Sociala. First, a parliamentary commission was set up to investigate the fraud. Later the government hired corporate investigations firm Kroll to conduct its own inquiry. Both investigations confirmed what was already known: that the three banks had carried out large numbers of transactions that, as described in the Kroll report, had "no sound economic rationale". Many of these loans were approved on the basis of fictitious guarantees to companies linked to a 28-year old Moldovan businessman, Ilan Shor, who in early 2014 became Chairman of Banca de Economii’s Board of Directors. So far some 30 people were indicted in relation to the fraud, including Shor, who was briefly placed under house arrest in May but later released. He subsequently ran for Mayor of the city of Orhei, a position he comfortably secured.

Yet there is a general frustration that the real beneficiaries of the fraud remain beyond the reach of the investigation. The practice of conducting business – legitimate or illegitimate – via proxies is strong in Moldova. The arrangements are complex and identifying the perpetrators of crimes is difficult. No one doubts that Shor is the proxy for more powerful oligarchs, but he’s no shabby stand-in either; tales of his lavish lifestyle abound. Take, for instance, his wedding in 2011 to Russian singer Jasmine. It was held in the Republican Palace, a mighty structure in central Chisinau, which was a symbolic reminder that money can buy political office.

So disconnected are the lives of ordinary Moldovans and the super-rich that Chisinau is a tale of two worlds. The average citizen’s annual salary is just over $3,000, which makes most people sensitive to even the slightest increases in the prices of electricity or bread; holidays abroad are a luxury. Those on the opposite end of the spectrum jet between Chisinau, Moscow and their holiday homes in France or Italy and live in opulence, though rarely in good taste. If the restaurant in the Nobil Hotel in Chisinau is any indication of how the top 1% lives, it’s a world of chandeliers, enormous leather furniture and gold fixtures. Perched on top of the capital’s most expensive hotel, those with wallets large enough to dine there look down on the shabby landscape of gray high-rise blocks and crumbling rooftops.

In February 2015, when Alaco last visited Chisinau, the government was struggling to work together and introduce a clear programme of reforms. Little progress has been made on the political front and the country is now facing additional economic strains. The fraud at Banca de Economii prompted the EU, the International Monetary Fund and World Bank to freeze their financial assistance to Moldova. This and a run on the banks caused the Moldovan leu to lose a quarter of its value against the dollar in the last six months.

It is clear why people are so angry they have come out onto the streets. What is not clear is whether the government is going to do anything meaningful.